BofA Customers Beat Occupy Wall Street to the Punch

Nov 2, 2011, 9:48 am EDT
BofA Customers Beat Occupy Wall Street to the Punch

Since September, individuals with an axe to grind against the glass tower-encased bigwigs of Wall Street have pieced together a seemingly unorganized but still unified protest in hopes of changing a system that has turned against them.

But when those corporate giants finally ceded a battle, it wasn’t on the grounds of Lower Manhattan’s Zuccotti Park, and it wasn’t against the sign-toting soldiers of Occupy Wall Street.

Bank of America (NYSE:BAC) on Tuesday announced it would drop its proposed $5-per-month debit-card fee — because the bank’s customers revolted against the move. News of BofA’s reversal marked the latest and most important of a steady string of consumer-led victories, including: Read 

First Stimulate the Economy, Then Cut Taxes

Nov 1, 2011, 2:16 pm EDT

Forget about Herman Cain’s “9-9-9 Plan” or Rick Perry’s “flat tax” — the best way to jump-start the economy is the “Sullivan Plan,” which calls for tax reform to be shelved until the economy has recovered further.

The idea that writer Martin A. Sullivan is proposing is a simple but powerful one. Too often, tax reform plans are done in a vacuum without considering their long-term consequences. Cain was forced to tweak the 9-9-9 plan after experts realized that 84% of Americans would see their taxes go up if it were enacted. Under Perry’s optional 20% flat tax, federal revenue would be slashed by 27% in 2015. Critics claim that the Texas governor’s proposal would benefit the richest Americans at the expense of everyone else.

While the tax code does need reform, creating more jobs is a far more pressing problem. Unfortunately, there is no bipartisan agreement on how to do it. With Washington gridlocked by partisan rancor and both President Barack Obama and Congress at or near record low job approval ratings, odds of any complicated legislation being enacted before the 2012 election are slim to none. Read 

Why Bernanke and the Fed Are Useless

Nov 1, 2011, 9:14 am EDT
Why Bernanke and the Fed Are Useless

Federal Reserve Chairman Ben Bernanke once again is center stage on Wall Street, as the Federal Open Market Committee meets this week. Will investors be greeted by some big news from Bernanke? Will we see a big market response thanks to some insights from the Fed’s leader or any of its representatives?

Highly unlikely. The sad reality is the Fed just doesn’t have a whole lot left to offer — aside from being the punching bag of Ron Paul and other critics. And to be completely honest, Bernanke and the rest of the Fed don’t really seem all that interested in making a lot of noise right now. Rather the central bank is simply contenting itself with defending its track record and pointing to a hopeful future.

In the words of Ben Bernanke, the Federal Reserve “continues to explore ways to further increase transparency about its forecasts and policy plans.” Read 

Occupy Wall Street Sells Out

Nov 1, 2011, 8:00 am EDT
Occupy Wall Street Sells Out

The counter-culture revolutionaries of the 1960s advised their young followers to never trust anyone over the age of 30. That actually is pretty good advice for the would-be revolutionary. By the time people turn 30, they generally have too much to lose — chances are good they have a spouse and a child, and perhaps a 401(k) and a mortgage payment to boot. Alas, by the age of 30, “the Man” has gotten to them.

It appears that the Man also has corrupted Occupy Wall Street. The movement — a motley collection of anti-capitalist protesters, angry youth and disgruntled labor — now has filed for trademark protection of the name.

The movement — which is unincorporated and whose leadership is something of a work in process — intends to use the trademarked name to sell T-shirts and other merchandise. Read 

Europe Isn’t Crisis-Free, But It’s Righting Itself

Oct 28, 2011, 7:23 am EDT
Europe Isn’t Crisis-Free, But It’s Righting Itself

Is Europe’s crisis over? The short answer is “no,” Europe’s crisis is not over. But Thursday’s news was a major step in the right direction.

Europe’s leaders finally acknowledged what we all already knew: Greece is insolvent and cannot pay its outstanding debts. The country has reached the point where higher taxes and lower spending cannot balance the books; they instead cause the economy to contract, tax revenues to fall further, and the debt-to-GDP ratio to rise. Recent estimates had Greece’s debt-to-GDP ratio at nearly 170% of GDP, and with the country’s yawning budget deficit, that number was getting higher every month. It’s a vicious, ugly cycle with no other way out.

Greece had reached the point where its debt load was unsustainable and default was inevitable. The Europeans wisely chose to negotiate a large “voluntary” haircut of 50 percent between Greece and its bondholders rather than run the risk that Greece unilaterally decide to stop paying. It was not a popular move, and Europe’s leaders will no doubt take political heat for it from their electorates. But it was the only sensible move to make. Read 

China Shadow Banking Crisis Could Dwarf Subprime Meltdown or Greek Debt Debacle

Oct 25, 2011, 3:05 pm EDT

China is taking some knocks lately over fears that a “hard landing” is in the cards for this booming emerging market. Admittedly, it all sounds a little overblown as China’s industrial output surged 13.8% in September over 2010 numbers — hardly indicative of an economic crisis. And although auto sales in China are lagging, they still are growing in what now is the largest vehicle market in the world after American car buying slowed to a crawl during the recession. And, of course, Macau casino stocks are booming as disposable income among wealthy Chinese continues to be in ample supply.

But those who watch manufacturing and consumer trends in China are buying into the head-fake. The fact is almost all production and consumption trends in this nation are subject to massive risks of Chinese banking and lending — a so-called “shadow banking” system that is unregulated, corrupt and wide-reaching in this communist nation.

Consider this: According to a study issued by the People’s Bank of China in 2010, non-banking-sector lending has expanded to anywhere between $1 trillion and $10 trillion — as much as 40% of the total lending activities of China’s economy. These loans come with exorbitant interest rates, ranging from 14% to as much as 70%. Read 

1 214 215 216 217 218 234